Judicial District of New London


      Banking; Statute of Limitations; Whether Provisions of Deposit Account Agreements Violate General Statutes § 42a-4-103 and Offend Public Policy; Whether Jury was Improperly Instructed on Continuing Course of Conduct Doctrine.  The plaintiff held accounts with the defendant bank.  It brought this action claiming breach of contract, negligence, conversion and violations of banking provisions of the Uniform Commercial Code (UCC).  The plaintiff alleged that the bank allowed one of the plaintiff’s employees to steal over $840,000 from the plaintiff through a series of unauthorized transactions occurring over a four year period.  The bank asserted that the claims were barred by language in the deposit account agreements providing that a customer must notify the bank of any unauthorized transaction within a specified period of time in order to make a claim.  The trial court found that such provisions violated General Statutes § 42a-4-103 (a), which provides that “the parties to the agreement cannot disclaim a bank’s responsibility for its lack of good faith or failure to exercise ordinary care or limit the measure of damages for the lack or failure” and further that they were void as contrary to public policy.  As to the bank’s statute of limitations defenses, the court instructed the jury that the limitations period could be tolled under the continuing course of conduct doctrine if it found that the bank engaged in later wrongful conduct related to its initial wrong or if it found that a special relationship existed between the parties, which could be established by proof of a relationship of continuing trust and a duty toward the plaintiff.  The jury returned a verdict for the plaintiff and awarded over $800,000 in damages.  It found that the statute of limitations had been tolled because the bank engaged in a continuous course of conduct and because the parties had a special relationship.  On appeal, the bank argues that the trial court erred in not allowing the jury to consider the deposit account agreements which, it claims, do not disclaim liability, but, rather, establish a condition precedent to a customer’s ability to make a claim.  The bank contends that such conditions precedent are consistent with the provisions of the UCC and do not offend public policy.  The bank also argues that the trial court improperly instructed the jury on the continuing course of conduct doctrine and that the evidence was insufficient to support the finding that the limitations period was tolled or that there was a “special relationship” between the plaintiff and the bank.  It maintains that the continuing course of conduct doctrine applies only where it may be impossible to pinpoint the exact date of a particular act or omission and where the negligence consists of a series of acts or omissions.  The bank argues that there was a series of distinct transactions here, each subject to its own statute of limitations, and that it assumed no continuing duty after each transaction was completed.  Finally, the bank argues that the plaintiff should not have prevailed on its breach of contract claim where it failed to prove the existence of a contract and that the verdict should have been reduced by the $100,000 the plaintiff received from its insurer.